Surely you’ve been hearing a lot about Brexit, and how the British voted to leave the European Union on Thursday, June 23, 2016. And while the monumental decision has been rocking the markets ever since, there’s one area where the uncertainty has created an opportunity: mortgage rates.
Mortgage rates were already historically low, but in the wake of the Brexit vote, they’ve dropped even further – to 3.48 percent for a 30-year fixed rate mortgage. As reported by Forbes, it was only a week ago that the 30-year fixed rate was at 3.56 percent, and 4 percent the year before. According to CNN Money, rates on 15-year fixed mortgages also sank – to 2.78 percent. And while Forbes points out that we’re not yet at the record low of 3.31 percent that was available in late 2012, that doesn’t change the fact that mortgage rates are uncharacteristically low.
Rates have descended in the wake of the Brexit vote thanks to the 10-year Treasury bond, which guides consumer lending.. As the Treasury dipped to 1.45 percent, mortgage rates went with it. Though the markets have begun to stabilize a bit, there’s no telling how long the mortgage rates will remain historically low – nor if they’ll drop further, or begin to rise.
So what does this mean for potential homeowners? Those who have been facing challenges in their home buying journey may benefit from these low rates, allowing them to potentially lock in a mortgage for less than before. CNN Money reported that home prices have increased by 5% since last year, meaning that housing costs are steadily increasing. Plus, there’s been a shortage in home inventory, which has helped demand create a hot and competitive real estate market that can be challenging to find a home in. But with these incredibly low mortgage rates available, homebuyers may have the chance to purchase a home and benefit from the mortgage rate drop.
Speculation and common questions abound regarding the impact for U.S. real estate markets due to Brexit. These same questions remain as to whether or not the Federal Reserve will raise, lower or hold onto current rates - There’s no telling what will come next.
In the meantime, potential homeowners may have a favorable chance to make their homeownership dreams come true. If you have any questions about beginning your homeownership journey, you can always reach out to one of our Relationship Specialists. They’re here to help you realize your dream of homeownership with ease!